tesla-chargerExpect to see plenty of electric cars on the roads in Olympia, Wash., this morning. Tesla supporters are gathering at the state Capitol to rally against legislation that would prevent the electric-car manufacturer from opening additional stores or service centers in Washington state.

The proposed restrictions, first reported by GeekWire last week, have been criticized by Tesla as an effort by the Washington State Auto Dealers Association to keep the company from expanding in the state. Campaign finance records show that the primary sponsors of the House and Senate bills, Rep. Steve Kirby and Sen. Mike Hewitt, each received $1,800 in campaign contributions from the auto dealers during the 2012 election cycle, the maximum allowed per election.

Kirby and Hewitt have not responded to messages left by GeekWire at their offices, and a staffer at the Auto Dealers Association said last week that no one was available to discuss the issue.

The auto dealers association made a wide variety of contributions to candidates in Washington state during the recent election cycle, including $1,800 to now-Gov. Jay Inslee, and $3,600 to Rob McKenna (across the primary and general election), the incumbent who lost to Inslee in that election.

The bills now under consideration include numerous provisions beyond the section that would restrict the Tesla stores. The legislation primarily focuses on auto dealers’ relationships with the manufacturers whose cars they sell.

The basis for the proposed restriction is the fact that Tesla sells directly to consumers, rather than working through licensed dealers. The original intent of these types of regulations was to prevent auto manufacturers from competing with their own licensed dealers, but Tesla isn’t competing with its own licensed dealers when it opens its own stores, because it doesn’t have its own licensed dealers.

Tesla also has its supporters in the state Legislature: “Tesla’s embrace of a direct, open competition sales approach is exactly what we say we want from old style, traditional industries to survive—innovation, creativity and an entrepreneurial spirit,” said Rep. Reuven Carlyle, who chairs the state’s finance committee, in a statement last week.

He added, “The ridiculous notion that the political process in the Legislature should intervene in the marketplace of ideas in the automobile industry to prevent Tesla from direct sales is patronizing at best, and many of us are committed to defeating this special interest legislation.”

Tesla, which has current locations in Seattle and Bellevue, is fighting similar battles in other states around the country, but the stakes in Washington are especially high: Washington was the top state in the country for Tesla sales last year, measured as a proportion of overall new vehicle registrations in the state, according to data from auto researcher Hedges & Co., cited by Bloomberg Businessweek.

The size of Tesla’s existing customer base here could help the company fight the bills. The online Tesla Motors Club is promoting the rally this morning at 10:30 a.m. at the Capitol, and encouraging Tesla supporters to contact the governor and legislators to oppose the bills.

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Comments

  • Guest

    Apple sells their products outside their own stores, as does Oakley, The North Face, Nike and many other companies. If Tesla wants to have their own stores, fine, but they should allow for dealership franchises like every other auto maker, otherwise it’s a monopoly.

    • http://www.thoughtful.co Chris Lynch

      I would encourage you to read what the word monopoly means before you throw it around so lightly.

      • Guest
        • http://www.thoughtful.co Chris Lynch

          Did you not make it past the first sentence of your own link?

          “A situation in which a single company or group owns all or nearly all of the market for a given type of product or service.”

          Tesla neither owns the electric car market nor the manufacturing of any components or services related to the ability for competitors to manufacture electric cars.

          I hope, for your own sake, that you’re not misunderstanding this definition to mean that Tesla cannot make and sell their own product.

          • Guest

            Did you not read my first post, I actually mention that it’s okay for them to sell their own product. However, by disallowing others to sell their product, they are acting as a monopoly. They own the market on the Tesla S sales and will not allow others to sell their cars. Being an EV auto manufacturer is not what makes them a monopoly.

          • http://StartedinSeattle.com/ Stephen Medawar

            You have to control the supply of a MARKET, not product, to be considered a monopoly.

          • http://www.thoughtful.co Chris Lynch

            I feel like this is a lost cause. You are allowed, by law, to make a product and sell it to anyone you want through any means you wish. The law does not, under any circumstance, require that someone who makes a product sells it in ways dictated by anyone else.

            Would it be nice if HBO sold their shows (Game of Thrones) on iTunes without me needing to have a cable subscription? Yes. Are they required to? No. Does Tesla make the Model S? Yes. Do they sell them at dealers that are not their own? No. Is that illegal or a monopoly? No. Can I make a product that everyone in the world wants and decide not to sell it? Yes. Does that mean I’m a monopoly? No.

            You are fundamentally misunderstanding the definition of “for a given type of product or service”. Please read your link again. The word “type” here is key to the debate.

          • balls187

            “You are allowed, by law, to make a product and sell it to anyone you
            want through any means you wish. The law does not, under any
            circumstance, require that someone who makes a product sells it in ways
            dictated by anyone else.”

            Not quite.

            Until recently, only state run liquor stores could sell liquor.

            Automatic open knives can only be purchased by military and law enforcement.

            And so on.

            I’m pointing out that there is enough precedent in curtailing sales and distribution of goods and services, that what you claim is factually incorrect.

            It’s just one business segment trying to use it’s influence to it’s advantage. Similar to Amazon trying to shoot down the Marketplace Fairness Act to keep it’s competitive advantage over brick and mortars.

          • http://texrat.net/ texrat

            You really do not understand what a monopoly is, even after others have explained it very well.

          • David Adams

            Oh snap!

    • http://StartedinSeattle.com/ Stephen Medawar

      I’m with Chris here. It’s funny that you bring up the word monopoly, when the auto dealers – if they block Tesla and other outside competition – would be an oligopoly or cartel.

      • Guest

        There are thousands of dealerships owned and operated by various groups and individuals. By definition, dealership franchises are not oligopolies. Are some run as a ‘cartel’, no. Are some run with shady business practices, yes.

        • http://StartedinSeattle.com/ Stephen Medawar

          If they band together (collude) to bar outside competition, that is the definition of an oligopoly.

          Maybe we should be talking about the real issue dealers have: If we allow Tesla to sell directly to consumers, what is to stop Ford, Chevy, or VW from doing the same. I understand that argument, but if protections are in place for existing relationships, Tesla shouldn’t be barred from selling their own product direct to consumers.

          • http://www.thoughtful.co Chris Lynch

            Agreed. I think all car manufacturers should be able to open their own dealers. They could then partner with independent dealers to serve markets where those companies do not feel they can adequately provide for their customers or those markets feel the manufacturers are doing a poor job of supporting them.

          • http://StartedinSeattle.com/ Stephen Medawar

            I actually disagree. I don’t think all manufacturers should be able to open their own dealerships. Current dealers have taken the risk to opened dealerships. Large manufacturers could come in and exploit a change in the system to take over a profitable market, effectively using the independent dealers to test the market.

            My argument is that you can’t bar Tesla from selling in new markets, because dealers don’t have existing relationships with Tesla (like they might with Ford, Chevy, or VW). I’m sure there is a way to protect the current relationships dealers have with manufacturers, without shutting Tesla out.

          • http://www.thoughtful.co Chris Lynch

            It’s a tough situation with no easy solution, but if you allow Tesla to sell cars without an independently owned dealer, I think others should also be able to participate. The doesn’t obviate the current dealer networks: instead it makes the market on all ends compete in quality, service, and performance.

            Perhaps a direction to pursue is that in “opening up” all manufacturers to their own dealers, they could buy out the dealers who have built that market. Restaurant franchises sometimes go this route when corporate buys out franchise owners. In summary, I think you can create a way for all manufacturers to play on the same ground while respecting the hard work dealers have done in building the market.

    • balls187

      > but they should allow for dealership franchises like every other auto maker

      Why?

  • http://www.extendedresults.com/ Patrick Husting

    If you can’t compete, then donate to the political party and you will gain an advantage. Sad state of affairs

  • savethispatient

    Minor pedantry: Rob McKenna wasn’t the incumbent in the Governor’s race, he was the Attorney General. Gov Gregoire didn’t run in the election.

  • CGriffin

    Here it is, plain and simple… Tesla will not be able to survive if they are forced to use independent dealerships, because dealerships make the vast majority of their profits in the “Service Department”. ICE-powered vehicles require constant service, and electric cars have very few moving parts, and are hardly ever in for service. Tesla knows that the independent dealerships WILL NOT try very hard to sell their cars because they won’t make enough money on them in the long term.

  • quickmatch

    OMG! Government caters to special business interests, restricting other-guys business interests (follow the campaign contributions). Who EVER heard of this kind of…bovine excrement? At least in New Jersey we can see the “government-must-stay-out-the-free-market” mavens crossing conservative principled fence-lines to do the dirty job. But in Washington State? WA is not the same state as NJ.

  • john winter

    We need to donate to candidates that WILL support Tesla, not ban it. Help to fight back and protect innovation! http://beta.fundelevator.com/causes/detail.php?End+Tesla+Ban+in+NJ-149

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